UPDATE 3-South Sudan says arrests 10, hunts ex-VP over "foiled coup"

* Ex-VP named as coup leader - no reaction from him

* Gunfire in capital for second day, at least 26 dead

* U.S. urges citizens to leave country

By Andrew Green

JUBA, Dec 17 (Reuters) - South Sudan said on Tuesday it had
arrested 10 senior political figures and was hunting for its
ex-vice president, accusing him of leading a "foiled coup" in
the oil-producing nation's capital, where gunfire rang out for a
second day.

The prominence of the names - including former finance
minister Kosti Manibe among the detained - underlined the size
of the rift in Africa's newest state, less than 2-1/2 years
after it seceded from Sudan.

The United States urged its citizens to leave the country
immediately, saying it was suspending normal operations at its
embassy.

Rival groups of soldiers started fighting in Juba Sunday
night into Monday morning and gunfire and blasts continued
sporadically up to Tuesday evening, leaving at least 26 people
dead, a health ministry official told Reuters.

President Salva Kiir appeared on television on Monday in
military fatigues saying forces loyal to former vice president
Riek Machar, whom he sacked in July, had attacked an army base
in a bid to seize power.

South Sudan remains one of the poorest and least developed
countries in Africa for all its oil reserves, and is plagued by
ethnic fighting, fuelled by weapons left after decades of war
with Sudan to the north.

The rift at the heart of its political elite will dismay oil
companies who had been counting on a period of relative
stability after South Sudan's independence to step up
exploration. France's Total and a group of largely Asian groups,
among them China's CNPC, all have interests there.

It will also be closely watched by South Sudan's neighbours,
who include some of the continent's most promising economies,
including Ethiopia and Kenya. Past conflicts have sent thousands
of refugees over South Sudan's borders.

THOUSANDS TAKE SHELTER

Kiir and Machar are from different ethnic groups which have
clashed in the past. Machar leads a dissident faction inside the
ruling Sudan People's Liberation Movement (SPLM) and was
planning to run for the presidency.

Fighting erupted outside his compound in Juba on Tuesday,
but his whereabouts were unknown, foreign affairs spokesman
Mawien Makol Arik told Reuters. Machar has so far not released a
statement.

The government on Tuesday accused him of being the "coup
leader" and listed four other wanted men, including Pagan Amum,
the SPLM's former Secretary General and the country's main
negotiator in a prolonged oil dispute with Sudan.

"Those who are still at large will be apprehended,"
Information Minister Michael Makuei said in a statement on a
government website. He added he believed they had fled to an
area north of the capital.

The 10 officials had been arrested "in connection with the
foiled coup attempt," the statement added.

Around 16,000 people had taken refuge in U.N. compounds in
Juba by noon on Tuesday and the numbers were rising, the United
Nations.

Streets were empty at the start of a dawn-to dusk curfew,
ordered by the president. Mobile phone signals were down for a
second day.

"Food and water an issue for the population as they don't
have fridges or city power so they buy food almost daily," said
one aid worker in Juba, who asked not to be identified. "They
haven't stocked up and are getting worried."

U.N. Secretary-General Ban Ki-moon spoke to Kiir on Tuesday
and called for his government to provide an "offer of dialogue
to its opponents and to resolve their respective differences
peacefully".

The president, who comes from South Sudan's dominant Dinka
ethnic group, sacked Machar, a Nuer, after mounting public
frustration at the government's failure to deliver tangible
improvements in public services and other basic demands.

The government played down suggestions the conflict had an
ethnic element, saying Kiir had met Nuer leaders to dispel the
"misleading information" they were being targeted.

Tensions have been building in the army, broadly along
ethnic lines, independently of the Kiir-Machar rivalry, said
analysts.

"The personalities involved are clearly important, but we
think this is more fundamentally about the SPLA rather than
necessarily being completely controlled by the SPLM political
figures," said Cedric Barnes, Crisis Group project director for
the Horn of Africa, based in Nairobi.

South Sudan is the size of France but has barely any tarmac
roads. The government's critics complain it suffers the same
ills as old Sudan - corruption, poor public services and
repression by the state of opponents and the media.

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